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Foreign Exchange Risk Hedging Policy: Evidence from France

In: Essays on Financial Analytics

Author

Listed:
  • Ghassen Nouajaa

    (Esprit School of Business (ESB))

  • Jean-Laurent Viviani

    (University of Rennes)

Abstract

This paper examines foreign exchange risk hedging determinants for a sample of 82 French non-financial firms. Starting from the observation that firms, often, use both currency derivatives and foreign debt, we find evidence that foreign debt can be considered as hedging tool in addition to currency derivatives. Our results show that currency derivatives’ hedging depends from firm size, financial distress risk, liquidity level, foreign sales and future growth opportunities. Foreign debt level depends from firm size, debt level, foreign sales and its future growth opportunities. We demonstrate, further, that foreign debt and currency derivatives are quite different hedging tools. Our results show that the level of operational hedging with foreign debt seems to be loosely correlated with that of currency derivatives.

Suggested Citation

  • Ghassen Nouajaa & Jean-Laurent Viviani, 2023. "Foreign Exchange Risk Hedging Policy: Evidence from France," Lecture Notes in Operations Research, in: Pascal Alphonse & Karima Bouaiss & Pascal Grandin & Constantin Zopounidis (ed.), Essays on Financial Analytics, pages 3-26, Springer.
    • Handle: RePEc:spr:lnopch:978-3-031-29050-3_1
    DOI: 10.1007/978-3-031-29050-3_1
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    More about this item

    Keywords

    Foreign exchange risk; Hedging; Currency derivatives; Foreign debt;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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